Texas Register

RULE §535.220Professional Conduct and Ethics
ISSUE 05/24/2019
ACTION Proposed
Preamble Texas Admin Code Rule

(a) - (d)(No change.)

(e)An inspector shall comply with the following requirements.

  (1)An inspector shall not inspect a property when any compensation or future referrals depend on reported findings or on the closing or settlement of a property.

  (2)In this section, "settlement service" means a service provided in connection with a prospective or actual settlement, and "settlement service provider" includes, but is not limited to, any one or more of the following:

    (A)federally related mortgage loan originator;

    (B)mortgage broker;

    (C)a lender or other person who provides any service related to the origination, processing or funding of a real estate loan;

    (D)[(C)] a title service provider;

    (E)[(D)] an attorney;

    (F)[(E)] a person who prepares documents, including notarization, delivery, and recordation;

     (G)a person who provides credit report services;

    (H)[(F)] an appraiser;

    (I)[(G)] an inspector;

    (J)[(H)] a settlement agent;

    (K)[(I)] a person who provides mortgage insurance services;

    (L)[(J)] a person who provides services involving hazard, flood, or other casualty insurance, [ or] homeowner's warranties, or residential service contract;

    (M)[(K)] a real estate agent or broker; and

    (N)[(L)] a person who provides any other services for which a settlement service provider requires a borrower or seller to pay.

  (3)An inspector shall not pay or receive a fee or other valuable consideration to or from any other settlement service provider for, but not limited to, the following:

    (A)the referral of inspections;

    (B)inclusion on a list of inspectors, preferred providers, or similar arrangements; or

    (C)inclusion on lists of inspectors contingent on other financial agreements.

  (4)An inspector shall not receive a fee or other valuable consideration, directly or indirectly, for referring services that are not settlement services or other products to the inspector's client without the client's consent.

  (5)This section does not prohibit an inspector from paying or receiving a fee or other valuable consideration, such as to or from a contractor, for services actually rendered.

  (6)An inspector shall not accept employment to repair, replace, maintain or upgrade systems or components of property covered by the Standards of Practice under this subchapter on which the inspector has performed an inspection under a real estate contract, lease, or exchange of real property within 12 months of the date of the inspection.

  (7)Inspectors shall not disclose inspection results or client information without prior approval from the client. Inspectors, at their discretion, may disclose observed immediate safety hazards to occupants exposed to such hazards when feasible.

  (8)This subsection does not prohibit [an inspector from]:

     (A)normal promotional or educational activity that is not conditioned on the referral of business and that does not involve the defraying of expenses that otherwise would be incurred; or

     [(A)engaging in legal promotional or educational activities to or with settlement service providers that are not conditioned on the referral of business; or]

     (B)a payment at market rates to any person for goods actually furnished or for services actually performed.

     [(B)purchasing advertising and promoting the inspector at market rates from any person in any publication, event or media.]

(f) - (g)(No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on May 8, 2019


Chelsea Buchholtz

General Counsel

Texas Real Estate Commission

Earliest possible date of adoption: June 23, 2019

For further information, please call: (512) 936-3177

Next Page Previous Page

Link to Texas Secretary of State Home Page | link to Texas Register home page | link to Texas Administrative Code home page | link to Open Meetings home page